Sensata Technologies Reports Second Quarter 2017 Financial Results

Sensata Technologies Reports Second Quarter 2017 Financial Results
Company delivers strong results and raises midpoint of organic revenue growth
and adjusted EPS guidance for FY-17
HENGELO, The Netherlands, July 25, 2017 (GLOBE NEWSWIRE) -- Sensata
Technologies (NYSE:ST) today announced financial results for its second
quarter and six months ended June 30, 2017.
Revenue in the second quarter of 2017 was $839.9 million, an increase of $12.3
million, or 1.5%, from revenue of $827.5 million in the second quarter of
2016. Excluding a 2.1% negative effect from changes in foreign exchange rates,
Sensata reported organic revenue growth of 3.6% in the second quarter of 2017.
Net income in the second quarter of 2017 grew 21.3% totaling $79.5 million,
which was 9.5% of revenue or $0.46 per diluted share, compared to net income
of $65.5 million in the second quarter of 2016, which was 7.9% of revenue or
$0.38 per diluted share. Adjusted net income in the second quarter of 2017
grew 11.8%, totaling $139.0 million, which was 16.6% of revenue or $0.81 per
diluted share, compared to adjusted net income of $124.3 million in the second
quarter of 2016, which was 15.0% of revenue or $0.73 per diluted share.
Changes in foreign exchange rates reduced Sensata's adjusted earnings per
share by ($0.01) in the second quarter of 2017 compared to the prior year
period.
“We were pleased with the organic revenue growth and robust margin expansion
we delivered in the second quarter of 2017,” said Martha Sullivan, President
and Chief Executive Officer. “Our performance was driven by double-digit
organic revenue growth in our heavy vehicle & off road business and strong
demand in Asia across both of our segments. The positive effects of our core
productivity initiatives combined with the improved profitability of our
acquired businesses are helping to drive our margin improvement. For the
first half of 2017, we have generated 3.6% organic revenue growth, expanded
adjusted EBIT margins by 100 basis points, and reported 12% organic growth in
adjusted EPS. As a result, we are raising our full year 2017 guidance for
revenue and adjusted EPS.”
Revenue in the six months ended June 30, 2017 was $1,647.1 million, an
increase of $23.1 million, or 1.4%, from revenue of $1,624.1 million in the
six months ended June 30, 2016. Excluding a 2.2% negative effect from changes
in foreign exchange rates, Sensata reported organic revenue growth of 3.6% in
the six months ended June 30, 2017.
Net income in the six months ended June 30, 2017 grew 19.9% totaling $151.2
million, which was 9.2% of revenue or $0.88 per diluted share compared to net
income of $126.1 million in the six months ended June 30, 2016, which was 7.8%
of revenue or $0.74 per diluted share. Adjusted net income in the six months
ended June 30, 2017 grew 9.7% totaling $260.5 million, which was 15.8% of
revenue or $1.52 per diluted share compared to adjusted net income of $237.5
million in the six months ended June 30, 2016, which was 14.6% of revenue or
$1.39 per diluted share. Changes in foreign exchange rates reduced Sensata's
adjusted earnings per share by ($0.04) in the six months ended June 30, 2017
compared to the prior year period.
Sensata’s ending cash balance at June 30, 2017 was $511.5 million, a strong
improvement from $351.4 million as of December 31, 2016 demonstrating
Sensata’s strong cash generation capabilities. During the six months ended
June 30, 2017, the Company generated operating cash flow of $233.8 million and
free cash flow of $166.7 million. The Company’s net debt at June 30, 2017 was
$2.803 billion, a reduction of $170 million from December 31, 2016.
Segment Performance
Three months ended Six months ended
$ in 000s June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Performance
Sensing $ 621,829 $ 615,570 $ 1,221,972 $ 1,212,745
revenue
Performance 169,100 152,525 320,836 298,312
Sensing profit
% of
Performance 27.2 % 24.8 % 26.3 % 24.6 %
Sensing
revenue
Sensing
Solutions $ 218,045 $ 211,975 $ 425,173 $ 411,349
revenue
Sensing
Solutions 70,101 68,175 137,539 131,423
profit
% of Sensing
Solutions 32.1 % 32.2 % 32.3 % 31.9 %
revenue
Performance Sensing’s profit as a percentage of revenue totaled 27.2% in the
second quarter of 2017. Excluding the impact of changes in foreign exchange
rates, Performance Sensing’s profit as a percentage of revenue was 27.4% in
the second quarter of 2017, representing an increase of 260 basis points from
the second quarter of 2016. Sensing Solutions’ profit as a percentage of
revenue totaled 32.1% in the second quarter of 2017. Excluding the impact of
changes in foreign exchange rates, Sensing Solutions’ profit as a percentage
of revenue was 32.0% in the second quarter of 2017, a decrease of 20 basis
points compared to the second quarter of 2016.
Guidance
Sensata anticipates revenue to be between $781 and $817 million in the third
quarter of 2017 compared to $789.8 million in the third quarter of 2016.
Additionally, the Company expects adjusted net income to be between $133 and
$139 million and adjusted earnings per share to be between $0.77 and $0.81 in
the second quarter of 2017. Sensata expects to incur approximately $1 to $2
million of integration-related expenses in the third quarter of 2017.
For the full year 2017, the Company has increased the low end and midpoint of
its previous guidance range for revenue and adjusted EPS. Sensata expects
revenue to be between $3.214 and $3.290 billion, which would represent organic
revenue growth of between 2 and 3 percent. For full year 2017, Sensata expects
adjusted EBIT to be between $741 and $755 million. Additionally, the Company
expects adjusted net income to be between $537 million and $551 million and
adjusted earnings per share to be between $3.12 and $3.20 for full year 2017,
which would represent organic earnings growth of 9 to 12 percent. Sensata
currently expects that changes in foreign currency exchange rates will lower
revenue by approximately $32 million, a slight improvement from its previous
guidance due to subsequent movements of foreign exchange rates. The company
expects that changes in foreign exchange rates will lower adjusted earnings
per share by ($0.02) to ($0.03) for the full year 2017, which is unchanged
from its previous guidance. Sensata expects to incur approximately $19 to $20
million of integration-related expenses for the full year 2017.
Conference Call & Webcast
Sensata will conduct a conference call today at 8:00 AM eastern time to
discuss its second quarter 2017 financial results and its outlook for the
third quarter and full year 2017. The dial-in numbers for the call are
1-877-317-6789 or +1-412-317-6789 and callers can reference the Sensata Q2
2017 Earnings Call. A live webcast and a replay of the conference call will
also be available on the investor relations page of the Company’s website at
http://investors.sensata.com. Additionally, a replay of the call will be
available until August 1st, 2017. To access the replay dial 1-877-344-7529 or
1-412-317-0088 and enter confirmation code: 10108464.
About Sensata Technologies
Sensata Technologies is one of the world's leading suppliers of sensing,
electrical protection, control and power management solutions with operations
and business centers in thirteen countries. Sensata's products improve safety,
efficiency, and comfort for millions of people every day in automotive,
appliance, aircraft, industrial, military, heavy vehicle, heating,
ventilation, and air conditioning, data, telecommunications, recreational
vehicle, and marine applications. For more information, please visit Sensata's
website at www.sensata.com.
Non-GAAP Financial Measures
We supplement the reporting of our financial information determined in
accordance with U.S. generally accepted accounting principles (“GAAP”) with
certain non-GAAP financial measures. We use these non-GAAP financial measures
internally to make operating and strategic decisions, including the
preparation of our annual operating plan, evaluation of our overall business
performance, and as a factor in determining compensation for certain
employees. We believe presenting non-GAAP financial measures is useful for
period-over-period comparisons of underlying business trends and our ongoing
business performance. We also believe presenting these non-GAAP measures
provides additional transparency into how management evaluates our business.
Non-GAAP financial measures should be considered as supplemental in nature and
are not meant to be considered in isolation or as a substitute for the related
financial information prepared in accordance with U.S. GAAP. In addition, our
non-GAAP financial measures may not be the same as, or comparable to, similar
non-GAAP measures presented by other companies.
The non-GAAP financial measures referenced by Sensata in this release include:
adjusted net income, adjusted net income margin, adjusted earnings per share
(“EPS”), adjusted earnings before interest and taxes (“EBIT”), adjusted EBIT
margin, free cash flow, net debt, organic revenue growth, and segment profit
margin measured on a constant currency basis. We also refer to the change of
certain non-GAAP measures, usually reported either as a percentage or number
of basis points, between two periods and measured on either a reported or an
organic basis, the latter of which excludes the impact of acquisitions, net of
exited businesses that occurred within the previous 12 months and the effect
of foreign currency exchange rate differences between the comparative
periods. Such reported changes are also considered non-GAAP measures.
Adjusted net income is defined as net income, determined in accordance with
U.S. GAAP, excluding certain non-GAAP adjustments which are described in the
accompanying reconciliation tables. Adjusted net income margin is calculated
by dividing adjusted net income by net revenue. Adjusted EPS is calculated by
dividing adjusted net income by the number of diluted weighted-average
ordinary shares outstanding in the period. We believe that these measures are
useful to investors and management in understanding our ongoing operations and
in analysis of ongoing operating trends.
Adjusted EBIT is defined as net income, determined in accordance with U.S.
GAAP, excluding interest expense, net, provision for/(benefit from) income
taxes, and certain non-GAAP adjustments which are described in the
accompanying reconciliation tables. Adjusted EBIT margin is calculated by
dividing adjusted EBIT by net revenue. We believe that these measures are
useful to investors and management in understanding our ongoing operations and
in analysis of ongoing operating trends.
Free cash flow is defined as net cash provided by operating activities,
determined in accordance with U.S. GAAP, less additions to property, plant,
and equipment and capitalized software. We believe that this measure is useful
to investors and management as a measure of cash generated by business
operations that will be used to repay scheduled debt maturities and can be
used to fund acquisitions, repurchase ordinary shares, or accelerate the
repayment of debt obligations.
Net debt is defined as total debt, capital lease and other financing
obligations, determined in accordance with U.S. GAAP, less cash and cash
equivalents. We believe that this measure is useful to investors and
management as an indicator of trends in our overall financial condition.
Organic revenue growth is defined as the reported percentage change in net
revenue, determined in accordance with U.S. GAAP, excluding the impact of
acquisitions, net of exited businesses that occurred within the previous 12
months and the effect of foreign currency exchange rate differences between
the comparative periods. We believe that this measure is useful to investors
and management in understanding our ongoing operations and in analysis of
ongoing operating trends.
Segment profit margin measured on a constant currency basis is defined as
segment profit, excluding the favorable or unfavorable impact of foreign
currency exchange rate differences with the comparative (prior) period,
divided by segment revenue, also adjusted to exclude the favorable or
unfavorable impact of foreign currency exchange rate differences with the
comparative (prior) period. We believe that this measure is useful to
investors and management in understanding our ongoing operations and in
analysis of ongoing operating trends.
Safe Harbor Statement
This earnings release contains “forward-looking statements” within the meaning
of the federal securities laws. These forward-looking statements relate to
analyses and other information that are based on forecasts of future results
and estimates of amounts not yet determinable. These forward-looking
statements also relate to our future prospects, developments, and business
strategies and include, among other things, our anticipated results for the
third quarter and full year 2017. Forward-looking statements contained herein,
or in other statements made by us, are made based on management’s expectations
and beliefs concerning future events impacting us, and are subject to
uncertainties and other important factors relating to our operations and
business environment, all of which are difficult to predict, and many of which
are beyond our control, that could cause our actual results to differ
materially from those matters expressed or implied by forward-looking
statements. Factors that might cause these differences include, but are not
limited to, risks associated with: adverse conditions in the automotive
industry; competitive pressures that could require us to lower prices or could
result in reduced demand for our products; integration of acquired companies,
including CST and Schrader; the assumption of known and unknown liabilities in
the acquisition of CST and Schrader; risks associated with our non-U.S.
operations and international business; litigation and disputes involving us,
including the extent of intellectual property, product liability, warranty,
and recall claims asserted against us; risks associated with our historical
and future tax positions; risks associated with labor disruptions or increased
labor costs; risks associated with our indebtedness; and risks associated with
breaches and other disruptions to our information technology infrastructure.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak to results only as of the date the statements were
made; and we undertake no obligation to publicly update or revise any
forward-looking statements, whether to reflect any future events or
circumstances or otherwise. For a discussion of potential risks and
uncertainties, please refer to the risk factors listed in our SEC filings.
Copies of our filings are available from our Investor Relations department or
from the SEC website, www.sec.gov.
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Operations
(Unaudited)
(In 000s, except per share amounts)
For the three months ended For the six months ended
June 30, 2017 June 30, June 30, 2017 June 30, 2016
2016
Net revenue $ 839,874 $ 827,545 $ 1,647,145 $ 1,624,094
Operating costs
and expenses:
Cost of revenue 541,032 537,441 1,073,758 1,065,819
Research and 31,216 32,288 63,030 63,639
development
Selling, general
and 81,010 77,660 151,284 149,591
administrative
Amortization of
intangible 41,003 50,563 81,261 101,010
assets
Restructuring
and special 6,389 1,475 17,439 2,330
charges
Total operating
costs and 700,650 699,427 1,386,772 1,382,389
expenses
Profit from 139,224 128,118 260,373 241,705
operations
Interest (40,038 ) (41,757 ) (80,315 ) (84,025 )
expense, net
Other, net (1,118 ) 130 4,078 5,618
Income before 98,068 86,491 184,136 163,298
taxes
Provision for 18,611 20,981 32,943 37,176
income taxes
Net income $ 79,457 $ 65,510 $ 151,193 $ 126,122
Net income per
share:
Basic $ 0.46 $ 0.38 $ 0.88 $ 0.74
Diluted $ 0.46 $ 0.38 $ 0.88 $ 0.74
Weighted-average ordinary shares
outstanding:
Basic 171,132 170,723 171,040 170,563
Diluted 171,920 171,343 171,913 171,299
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
($ in 000s) For the three months ended For the six months ended
June 30, 2017 June 30, 2016 June 30, June 30,
2017 2016
Net income $ 79,457 $ 65,510 $ 151,193 $ 126,122
Other
comprehensive
(loss)/income, net
of tax:
Deferred
(loss)/gain on
derivative (11,168 ) 178 (11,036 ) (16,525 )
instruments, net
of
reclassifications
Defined benefit
and retiree 735 59 1,215 267
healthcare plans
Other
comprehensive (10,433 ) 237 (9,821 ) (16,258 )
(loss)/income
Comprehensive $ 69,024 $ 65,747 $ 141,372 $ 109,864
income
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Balance Sheets
(Unaudited)
($ in 000s)
June 30, December 31,
2017 2016
Assets
Current assets:
Cash and cash equivalents $ 511,484 $ 351,428
Accounts receivable, net of allowances 565,636 500,211
Inventories 411,351 389,844
Prepaid expenses and other current assets 99,738 100,002
Total current assets 1,588,209 1,341,485
Property, plant and equipment, net 726,403 724,046
Goodwill 3,005,464 3,005,464
Other intangible assets, net 997,823 1,075,431
Deferred income tax assets 24,416 20,695
Other assets 75,306 73,855
Total assets $ 6,417,621 $ 6,240,976
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt, capital $ 10,704 $ 14,643
lease and other financing obligations
Accounts payable 329,404 299,198
Income taxes payable 25,112 23,889
Accrued expenses and other current liabilities 235,388 245,566
Total current liabilities 600,608 583,296
Deferred income tax liabilities 401,720 392,628
Pension and other post-retirement benefit 35,591 34,878
obligations
Capital lease and other financing obligations, 30,929 32,369
less current portion
Long-term debt, net 3,225,325 3,226,582
Other long-term liabilities 29,834 29,216
Total liabilities 4,324,007 4,298,969
Total shareholders’ equity 2,093,614 1,942,007
Total liabilities and shareholders’ equity $ 6,417,621 $ 6,240,976
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in 000s) For the six months ended
June 30, 2017 June 30, 2016
Cash flows from operating activities:
Net income $ 151,193 $ 126,122
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 54,802 51,345
Amortization of deferred financing costs and 3,693 3,678
original issue discounts
Gain on sale of assets (1,180 ) —
Share-based compensation 10,009 8,522
Amortization of inventory step-up to fair — 2,319
value
Amortization of intangible assets 81,261 101,010
Deferred income taxes 9,004 15,599
Unrealized loss/(gain) on hedges and other 8,229 (2,043 )
non-cash items
Changes in operating assets and liabilities, (83,162 ) (59,921 )
net of effects of acquisitions
Net cash provided by operating activities 233,849 246,631
Cash flows from investing activities:
Acquisition of CST, net of cash received — 4,688
Additions to property, plant and equipment and (67,192 ) (64,466 )
capitalized software
Investment in equity securities — (50,000 )
Proceeds from the sale of assets 7,151 650
Other (1,500 ) —
Net cash used in investing activities (61,541 ) (109,128 )
Cash flows from financing activities:
Proceeds from exercise of stock options and 2,947 3,067
issuance of ordinary shares
Payments on debt (12,341 ) (168,679 )
Payments to repurchase ordinary shares (2,721 ) (4,516 )
Payments of debt issuance costs (137 ) (518 )
Net cash used in financing activities (12,252 ) (170,646 )
Net change in cash and cash equivalents 160,056 (33,143 )
Cash and cash equivalents, beginning of period 351,428 342,263
Cash and cash equivalents, end of period $ 511,484 $ 309,120
Revenue by Business, Geography, and End Market (Unaudited)
(% of total revenue) Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Performance Sensing 74.0 % 74.4 % 74.2 % 74.7 %
Sensing Solutions 26.0 % 25.6 % 25.8 % 25.3 %
Total 100.0 % 100.0 % 100.0 % 100.0 %
(% of total revenue) Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Americas 41.4 % 42.8 % 41.9 % 43.2 %
Europe 32.5 % 33.0 % 31.9 % 33.2 %
Asia/Rest of World 26.1 % 24.2 % 26.2 % 23.6 %
Total 100.0 % 100.0 % 100.0 % 100.0 %
(% of total Three months ended June 30, Six months ended June
revenue)^1 30,
2017 2016 2017 2016
Europe automotive 24.4 % 25.5 % 24.2 % 25.7 %
North America 18.8 % 20.0 % 19.3 % 20.2 %
automotive
Asia automotive 17.4 % 16.8 % 17.7 % 16.5 %
Rest of world 0.4 % 0.3 % 0.3 % 0.3 %
automotive
Heavy vehicle and 14.6 % 13.3 % 14.3 % 13.6 %
off-road
Appliance and
heating, ventilation 6.7 % 5.7 % 6.6 % 5.7 %
and air-conditioning
Industrial 9.6 % 9.0 % 9.6 % 9.1 %
Aerospace 4.5 % 4.6 % 4.6 % 4.6 %
All other 3.6 % 4.8 % 3.4 % 4.3 %
Total 100.0 % 100.0 % 100.0 % 100.0 %
^1 Reclassification of certain acquired product lines has led to retrospective
adjustments of certain prior period end-market percentages.
The following unaudited table reconciles Sensata’s net income to adjusted net
income for the three and six months ended June 30, 2017 and 2016.
(in 000s, except per Three months Six months
share amounts) ended June 30, ended June 30,
2017 2016 2017 2016
Net income $ 79,457 $ 65,510 $ 151,193 $ 126,122
Restructuring and 7,501 3,161 15,192 6,800
special charges
Financing and other — 275 — 1,056
transaction costs
Deferred loss/(gain) 2,602 (8,294 ) (2,738 ) (21,567 )
on other hedges
Depreciation and
amortization expense
related to the step-up 41,372 51,891 83,366 105,757
in fair value of fixed
and intangible assets
and inventory
Deferred income tax
and other tax 6,271 9,942 9,813 15,699
expense/(benefit)
Amortization of
deferred financing 1,836 1,834 3,693 3,678
costs
Total adjustments $ 59,582 $ 58,809 $ 109,326 $ 111,423
Adjusted net income $ 139,039 $ 124,319 $ 260,519 $ 237,545
Weighted average
diluted shares 171,920 171,343 171,913 171,299
outstanding
Adjusted EPS $ 0.81 $ 0.73 $ 1.52 $ 1.39
Sensata's definition of adjusted net income excludes the deferred provision
for/(benefit from) income taxes and other tax expense/(benefit). Sensata's
deferred provision for/(benefit from) income taxes includes: adjustments for
book-to-tax basis differences, due primarily to the step-up in fair value of
fixed and intangible assets and goodwill, the utilization of net operating
losses, and adjustments to our U.S. valuation allowance in connection with
certain acquisitions. Other tax expense/(benefit) includes certain adjustments
to unrecognized tax positions.
As Sensata treats deferred income taxes as an adjustment to compute adjusted
net income, the deferred income tax effect associated with the reconciling
items, above, would not change adjusted net income for any period presented.
The current income tax (benefit)/expense associated with the reconciling items
above, which is included in adjusted net income, would be as follows:
Depreciation and amortization expense related to the step-up in fair value of
fixed and intangible assets and inventory: $(0.0) million for the three months
ended June 30, 2017 and 2016 and $(0.0) million and $(0.1) million for the six
months ended June 30, 2017 and 2016, respectively; and Restructuring and
special charges: $(0.1) million and $(0.3) million for the three months ended
June 30, 2017 and 2016, respectively, and $(0.2) million and $(0.3) million
for the six months ended June 30, 2017 and 2016, respectively.
The following unaudited table identifies where in the Condensed Consolidated
Statements of Operations the adjustments to reconcile net income to adjusted
net income were recorded for the three and six months ended June 30, 2017 and
2016.
($ in 000s) Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Cost of revenue $ 5,460 $ 3,551 $ 10,637 $ 6,924
Selling, general and 1,795 1,075 3,098 2,720
administrative
Amortization of 39,584 49,130 78,513 98,198
intangible assets
Restructuring and 2,034 904 6,310 1,704
special charges
Interest expense, 1,836 1,834 3,693 3,678
net
Other, net 2,602 (7,627 ) (2,738 ) (17,500 )
Provision for income 6,271 9,942 9,813 15,699
taxes
Total adjustments $ 59,582 $ 58,809 $ 109,326 $ 111,423
The following unaudited tables reconcile the Company’s net cash provided by
operating activities to free cash flow.
($ in 000s) Three months ended June % Change Six months ended June 30, %
30, Change
2017 2016 2017 2016
Net cash
provided by $ 114,148 $ 110,429 3.4 % $ 233,849 $ 246,631 (5.2 )%
operating
activities
Additions
to
property,
plant and (34,133 ) (30,231 ) (12.9 )% (67,192 ) (64,466 ) (4.2 )%
equipment
and
capitalized
software
Free cash $ 80,015 $ 80,198 (0.2 )% 166,657 $ 182,165 (8.5 )%
flow
The following unaudited table reconciles Sensata’s diluted net income per
share to organic adjusted EPS growth for the three and six months ended June
30, 2017 and 2016. The amounts in the table below have been calculated based
on unrounded numbers. Accordingly, certain amounts may not sum due to the
effect of rounding.
Three months Six months
ended June 30, ended June 30,
2017 2016 2017 2016
Diluted net income per share $ 0.46 $ 0.38 $ 0.88 $ 0.74
Non-GAAP adjustments:
Restructuring and special 0.04 0.02 0.09 0.04
charges
Financing and other transaction 0.00 0.00 0.00 0.01
costs
Deferred loss/(gain) on other 0.02 (0.05 ) (0.02 ) (0.13 )
hedges
Depreciation and amortization
expense related to the step-up 0.24 0.30 0.48 0.62
in fair value of fixed and
intangible assets and inventory
Deferred income tax expense and 0.04 0.06 0.06 0.09
other tax expense/(benefit)
Amortization of deferred 0.01 0.01 0.02 0.02
financing costs
Adjusted EPS $ 0.81 $ 0.73 $ 1.52 $ 1.39
Percentage change in adjusted 11.0 % 9.4 %
EPS
Less: year-over-year impact due
to:
Foreign exchange rate (1.3 )% (2.8 )%
differences
Organic adjusted EPS growth 12.3 % 12.2 %
The following unaudited table reconciles Sensata’s total debt, capital lease
and other financing obligations to net debt.
Balance as of
($ in 000s) June 30, December 31, Change ($)
2017 2016
Current portion of long-term
debt, capital lease and other $ 10,704 $ 14,643 $ (3,939 )
financing obligations
Capital lease and other
financing obligations, less 30,929 32,369 (1,440 )
current portion
Long-term debt, net 3,225,325 3,226,582 (1,257 )
Total debt, capital lease and 3,266,958 3,273,594 (6,636 )
other financing obligations
Less: Discounts (16,426 ) (17,655 ) 1,229
Less: Deferred financing costs (31,192 ) (33,656 ) 2,464
Gross indebtedness 3,314,576 3,324,905 (10,329 )
Less: Cash and cash equivalents 511,484 351,428 160,056
Net debt $ 2,803,092 $ 2,973,477 $ (170,385 )
The following unaudited tables reconcile Sensata’s net income to adjusted EBIT
for the three and six months ended June 30, 2017 and 2016. Percentage amounts
in the table below have been calculated based on unrounded numbers.
Accordingly, certain amounts may not sum due to the effect of rounding.
$ in thousands % of net revenue
Three months ended June 30, Three months ended June
30,
2017 2016 2017 2016
Net income $ 79,457 $ 65,510 9.5 % 7.9 %
Interest expense, net 40,038 41,757 4.8 % 5.0 %
Provision for income 18,611 20,981 2.2 % 2.5 %
taxes
Earnings before interest 138,106 128,248 16.4 % 15.5 %
and taxes (“EBIT”)
Non-GAAP adjustments:
Restructuring and 7,501 3,161 0.9 % 0.4 %
special charges
Financing and other — 275 0.0 % 0.0 %
transaction costs
Deferred loss/(gain) on 2,602 (8,294 ) 0.3 % (1.0 )%
other hedges
Depreciation and
amortization expense
related to the step-up 41,372 51,891 4.9 % 6.3 %
in fair value of fixed
and intangible assets
and inventory
Adjusted EBIT $ 189,581 $ 175,281 22.6 % 21.2 %
Year-over-year change 8.2 % 140 bps
Less: year-over-year
impact due to:
Foreign exchange rate (0.6 )% 30 bps
differences
Organic adjusted EBIT 8.8 % 110 bps
growth
$ in thousands % of net revenue
Six months ended Six months ended June 30,
June 30,
2017 2016 2017 2016
Net income $ 151,193 $ 126,122 9.2 % 7.8 %
Interest expense, net 80,315 84,025 4.9 % 5.2 %
Provision for income taxes 32,943 37,176 2.0 % 2.3 %
EBIT 264,451 247,323 16.1 % 15.2 %
Non-GAAP adjustments:
Restructuring and special 15,192 6,800 0.9 % 0.4 %
charges
Financing and other — 1,056 0.0 % 0.1 %
transaction costs
Deferred gain on other (2,738 ) (21,567 ) (0.2 )% (1.3 )%
hedges
Depreciation and
amortization expense
related to the step-up in 83,366 105,757 5.1 % 6.5 %
fair value of fixed and
intangible assets and
inventory
Adjusted EBIT $ 360,271 $ 339,369 21.9 % 20.9 %
Year-over-year change 6.2 % 100 bps
Less: year-over-year impact
due to:
Foreign exchange rate (2.2 )% 0 bps
differences
Organic adjusted EBIT 8.4 % 100 bps
growth
The following unaudited table reconciles Sensata’s projected (GAAP) diluted
net income per share to its projected adjusted EPS for the three months ended
September 30, 2017 and full year ended December 31, 2017. The amounts in the
table below have been calculated based on unrounded numbers. Accordingly,
certain amounts may not sum due to the effect of rounding.
Three months ended Full year ended
September 30, 2017 December 31, 2017
Low End High End Low End High End
Projected diluted net income $ 0.48 $ 0.49 $ 1.90 $ 1.94
per share
Restructuring and special 0.00 0.02 0.09 0.11
charges
Financing and other — — — —
transaction costs
Deferred (gain)/loss on other — — (0.02 ) (0.02 )
hedges *
Depreciation and amortization
expense related to the step-up
in fair value of fixed and 0.24 0.24 0.96 0.96
intangible assets and
inventory
Deferred income tax and other 0.04 0.05 0.15 0.17
tax expense/(benefit)
Amortization of deferred 0.01 0.01 0.04 0.04
financing costs
Projected adjusted EPS $ 0.77 $ 0.81 $ 3.12 $ 3.20
Weighted average diluted 171,900 171,900 171,900 171,900
shares outstanding (in 000s)
* We are unable to predict movements in commodity prices and, therefore, the
impact of mark-to-market adjustments on our commodity forward contracts to our
projected 2017 diluted net income per share. In prior periods, such
adjustments have been significant to our reported GAAP earnings.
Contacts:
Investors: Media:
Joshua Young Alexia Taxiarchos
(508) 236-2196 (508) 236-1761
Joshua.young@sensata.com ataxiarchos@sensata.com
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